Tax Tinkering Takes Precedence
Kitty Miv, Editor
01 July, 2020
In last week's column, we examined the reforms being put in place by various governments around the edges of the COVID-19 pandemic, as it were, looking at measures which may tangentially impact, or be impacted by, the crisis, but which are not primarily concerned with its mitigation.
This week, in a variation on that theme, we will be taking a look at the non-core COVID-19 measures, with a special emphasis on which leisure activities and types of consumption governments are seeking to encourage and discourage as the global cogs begin to turn again.
The Bulgarian authorities set out their stall in mid-June, publishing legislation providing for a temporary value-added tax cut for the catering sector (from July 1 to December 31), for e-books, and for certain baby products.
Under the measures, food served in catering outlets will be taxed at the nine percent reduced rate of VAT. However, alcoholic beverages served in restaurants will continue to be taxed at the 20 percent standard rate.
The legislation also reduces VAT on printed and digital books, baby foods, and diapers to nine percent.
Meanwhile, in the United States, the leisure emphasis seemed to be on pursuits which come with built-in social distancing, as the IRS issued a notice providing expanded disaster relief for taxpayers who owe federal excise tax for sales of sport fishing or archery equipment.
According to Notice 2020-48, federal excise tax filing and payment deadlines for these items, normally due July 31, 2020, are postponed until October 31, 2020.
The notice also cancels associated interest, penalties, and additions to tax, for taxpayers who owe a federal excise tax for these items for the second quarter of 2020, and who file and pay by October 31.
In Norway, however, the Government seemed to be very clear on what Norwegians should not be doing with their post-pandemic time, and that is altering themselves cosmetically.
The Norwegian Ministry of Finance has launched a public consultation on a proposal to remove the value-added tax exemption for alternative health treatments and cosmetic surgery, potentially from January 1, 2021.
Under current rules, supplies of alternative treatments are exempt from VAT when the provider is an authorized health care professional or is included in the register of alternative treatment providers. However, the Government is of the view that such treatments are offered outside of normal health care settings and should therefore not benefit from the VAT exemption for health care providers.
Some forms of cosmetic treatments are also exempt from VAT. The Government is proposing that these treatments should not be included in the VAT exemption for health care.
The Government proposes that these changes should be effective from January 1, 2021.
And in Europe, it would appear that post-pandemic boozing – to excess at least – is off the cards, as it emerged that EU member states have reached a provisional agreement on modernized taxation rules for alcohol products, following a meeting held on June 24, at which member states' ambassadors to the EU provisionally endorsed proposals to update the excise duty rules on alcohol within the EU.
Since 1992, EU countries have had in place common rules to ensure that excise duties are applied in the same way and to the same products everywhere in the EU. These rules include minimum excise duty rates. The reform package will extend the special regime of reduced excise duty rates for small beer and ethyl alcohol producers to producers of other fermented drinks, such as cider. It will increase the threshold for lower strength beer that can benefit from reduced rates from 2.8 percent volume to 3.5 percent volume, with the aim of incentivizing consumers to choose low strength over stronger alcoholic drinks.
Until next week!
« Go Back to Blogs